How Competitive Intelligence Can Help You Spot Opportunities and Avoid Pitfalls in Declining Markets

Declining markets (or more precisely, decreasing demand for specific products) involve high risk, so you need competitive intelligence to help you recognize when you're competing in one. An obvious tell is when you see a competitor engaging in the following:

Rebranding its declining products: Your competitor may try to tweak the product and introduce it as something new and improved to extend its life.

Setting up smoke screens: A company may increase its marketing and sales efforts around an aging product as a smoke screen to obscure its plans to introduce an innovative new product to the market.

Why would your competitor be doing such things? Well, competitors whose products reach the mature stage have almost always recovered their development and launch costs, so they have everything to gain and nothing to lose by extending the product's life.

What you really want to watch for is a competitor's research and development expenses as a percentage of sales. An unexplained jump in the percentage tells you that while the company is pushing its old product, it may have a new and improved one in the pipeline.

Remain vigilant for any signs that your competitors are about to introduce something to the market that represents a revolutionary change. Such changes can result in long-term loss cycles while your company tries to catch up. Your stealth CI team (sales people, those who attend industry conventions, and so on) often get wind of such changes when a competitor engages in a little bragging.